The Story of Facebook's Acquisition of Instagram
When Facebook CEO Mark Zuckerberg offered a high price for the revenue-less Instagram app, people thought he was crazy. But Zuckerberg saw the potential of adding Instagram's user base to Facebook's own and the acquisition was wildly successful. Learn the story of this legendary startup acquisition.
Andrew Gazdecki
Founder and CEO of @acquiredotcom. https://t.co/wRMIssDmhl has helped 100s of startups get acquired and facilitated $500m+ in closed deals.
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Some acquisitions fail.
— Andrew Gazdecki (@agazdecki) April 10, 2023
Some are wildly successful.
Here's the story of one of the most legendary startup acquisitions.
Facebook's acquisition of Instagram. 🧵 pic.twitter.com/ZJbq6Hl59r -
In 2012, Instagram was a hot new photo-sharing app with millions of users, but no revenue. Facebook CEO Mark Zuckerberg saw the potential of adding Instagram's user base to Facebook's own, but the idea was met with skepticism from investors and industry insiders alike. pic.twitter.com/01h3S4Q8fb
— Andrew Gazdecki (@agazdecki) April 10, 2023 -
People thought Zuckerberg was crazy for offering such a high price for an app with no revenue.
— Andrew Gazdecki (@agazdecki) April 10, 2023
But Zuckerberg believed in Instagram's potential and was willing to take a risk. -
Facebook offered to buy Instagram for $1 billion, which was a shocking price tag for a company that had no revenue. But Zuckerberg knew Instagram's potential and was willing to pay a premium for it.
— Andrew Gazdecki (@agazdecki) April 10, 2023 -
After weeks of negotiations.
— Andrew Gazdecki (@agazdecki) April 10, 2023
Zuckerberg's persistence paid off, and Instagram agreed to sell to Facebook for $1 billion. pic.twitter.com/FyJDvqGSqu -
But the acquisition was far from smooth sailing.
— Andrew Gazdecki (@agazdecki) April 10, 2023
Many Instagram users were unhappy about the deal, fearing that Facebook would ruin the app with ads and excessive data tracking. -
To stop the backlash, Zuckerberg promised to let Instagram continue to operate independently and even gave the app's co-founders, Kevin Systrom and Mike Krieger, complete control over the platform.
— Andrew Gazdecki (@agazdecki) April 10, 2023 -
The future of the acquisition was uncertain.
— Andrew Gazdecki (@agazdecki) April 10, 2023
Would Instagram be able to maintain its loyal user base while under Facebook's ownership?
Or would it crumble under the pressure of increased revenue expectations? -
Despite the uncertainty, the acquisition turned out to be a massive success for both companies.
— Andrew Gazdecki (@agazdecki) April 10, 2023
Instagram continued to grow and became one of the most popular social media platforms in the world, with more than 1 billion active users today. pic.twitter.com/v8nknnofcY -
Facebook was able to leverage Instagram's massive user base to boost its own user numbers and revenue.
— Andrew Gazdecki (@agazdecki) April 10, 2023
And Zuckerberg's bet on Instagram paid off big time, as the platform's value has skyrocketed since the acquisition. -
Instagram is worth more than $100 billion today which is a 100x and growing return.
— Andrew Gazdecki (@agazdecki) April 10, 2023
Looking back the acquisition of Instagram has been widely regarded as one of the smartest business moves in recent history. pic.twitter.com/W3BIncXCsl